UPDATE 1-Deutsche Postbank weighed by writedowns, provisions

* Postbank sees continued improvement in pretax result

* Postbank sees higher loan defaults, insolvencies rest 2009

* Took a 61 mln euros Q3 charge related to CIT insolvency

(Adds details, background)

FRANKFURT, Nov 5 (Reuters) - Deutsche Postbank (DPBGn.DE) turned in a pretax loss in the third quarter, weighed down by charges related to the CIT insolvency and a hike in loan loss provisions as the economic slowdown took its toll on the German lender.

Postbank, which has about 14 million customers, said on Thursday a rise in deposits to record levels left it confident it could reach its target of a return on equity between 13 percent and 15 percent in the medium term.

But provisions for loan defaults rose to 173 million euros, above the 148 million euros taken in the second quarter, but still in line with expectations, Postbank said in a statement.

Postbank said it expected further writedowns on toxic assets in the fourth quarter but said writedowns had peaked and would decline.

Postbank took a third-quarter writedown of 61 million euros related to the insolvency of CIT while writedowns on assets linked to subprime mortgages rose to 158 million euros.

Deutsche Postbank, partially owned by Deutsche Bank (DBKGn.DE), posted a 59 million euro pretax loss in the third quarter, worse than the 33 million euros expected by analysts but an improvement from a 448 million euro loss a year ago.

The Bonn-based lender swung to a 42 million euro net profit in the quarter from a 349 million euro loss in the year-earlier period.

Deutsche Bank, which owns a stake of nearly 30 percent in Postbank, last week said there was "no need to move quickly" on buying the remaining stake.

(Reporting by Edward Taylor)